Repeat business is more cost-effective and efficient than constantly trying to win over new business, but it’s getting harder to achieve.
Greater buyer bargaining power is placing extra pressure on businesses to lower prices, alter products and provide even greater customer service. Customer loyalty is getting harder to obtain, but customer lifetime value (CLTV) is what businesses should still be focused on to drive growth because attributing value to customer behaviour creates a solid basis for long-term sales success.
Why long-term CLTV matters
Consider the cost of providing a monthly or bi-monthly newsletter to a list of satisfied clients, versus the cost of promoting to prospects. It makes sense to get your retention strategy right before shifting your attention to new business.
Cost per acquisition (CPA) is commonly used to ascertain customer value. This is basically a pricing model where the advertiser pays for a specific acquisition, for example, a click, sign-up, or registration. This is fine for growing a business in the short term, and is an effective method for gathering customer insights, but what about the long-term?
Emphasis on long-term acquisition has turned good businesses into global enterprises, like Starbucks and Lego, both of which are driven by cross-generational revenue. Several factors are important when calculating a customer’s long-term value after their original purchase; how many times that customer has bought again, the operational costs of retaining that customer, discounts and pricing, whether that customer engaged with cross-sell and up-sell promotions and finally, how high their conversion rate is.
Popular ways to improve CLTV:
- Customer relationship management (CRM) programmes
- Loyalty schemes
- Membership schemes
Customer controlled value
Digital companies are in a better position than offline companies for improving customer loyalty in an increasingly data-driven CRM era. Businesses that employ CLTV strategies, for example, Amazon and Netflix, provide greater autonomy to customers and are so successful because they place a lot of trust in the hands of their customers through a subscription-based model. For example, Netflix doesn’t really mind if a customer shares a password with friends or family. What matters is that the customer remains active and shares the word with others.
History tells us that if you construct a CLTV model upon discounts alone, customers will leave quickly because they don’t feel a long-term attachment with your brand. On the other hand, if the customer paves the way for your business’ success through referrals to others, positive reviews and product or service feedback, you’re much more likely to find sustained success with your digital marketing campaigns.
Quality email content directly contributes to lifetime customer value and has become a cornerstone of customer retention in our digital age. Today’s software capabilities enable marketers to send timely and relevant content to different sets of customers, based on geographic, demographic and behavioural data.
For example, a student in Brighton who shops at H&M during its annual Christmas sale can receive a reminder message just before the sale, the items they may be interested in (based on past behaviour) a party fashion trends guide to lend a helping hand. The content becomes valuable, relevant, and deserving of a click-through and perhaps loyalty.
86% of consumers would like to receive promotional emails from companies they do business with at least monthly – Source
Great acquisition models:
Find a creative edge – today’s customer-centric schemes are all about delivering a better user experience rather than just more points or credits
Are effortless – trapping your customers by small print, pop-ups and registration forms is a CLTV cardinal sin
Are highly targeted – targeted campaigns don’t just reach the right audience, they have the power to change customer behaviours. For example, limited-time customer discounts have been distributed by Starbucks to raise sales during non-peak periods.
All this and more can be achieved by forward-thinking email marketing software. Email responses can be predictable or less predictable, based on the buying patterns of customer segments. The more you target subscribers with solutions or relevant information, the more you can connect with your customers on their terms.
Here at Cobb Digital, we were on the look-out for a platform that allowed us to deliver great results for our clients…and we found it! Email+ provides a feature-rich email marketing platform complete with all the tools we need to provide a cost-effective and reliable email service that delivers great results, every time.
If you’re looking to develop and implement some really tactical and strategically laid out email automations that are perfectly tailored to your business objectives and customer lifecycle, give us a call on 01273 208913 or fill in the form below to request a callback.